Passionate about IP! Since June 2003 the IPKat weblog has covered copyright, patent, trade mark, info-tech and privacy/confidentiality issues from a mainly UK and European perspective. The team is David Brophy, Merpel, Jeremy Phillips, Eleonora Rosati, Nicola Searle, Darren Smyth, Annsley Merelle Ward and Neil J. Wilkof. You're welcome to read, post comments and participate in our community. You can email the Kats here

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Tuesday, 10 June 2014

A hearty katpat goes to guest blogger Rebecca Gulbul for providing the following analysis of a fascinating decision in a passing-off action that forms part of the growing body of case law in which this Kat's favourite doctrine of 'initial interest confusion' is raised -- and then lowered again. Rebecca writes:

Moroccanoil (MIL)
made and sold various hair products worldwide. These products
have been sold in the UK since 2009. MIL's star product of is a hair oil,
marketed under the name Moroccanoil and sold in a brown bottle with a blue
label. In March 2012, Aldi started selling a new hair oil product called
Miracle Oil. This was sold in a similarly-shaped bottle, also embellished with a blue
label. MIL alleged that this amounted to passing off and commenced proceedings accordingly.

The law

Had there been passing off? Judge Hacon reiterated the
principles of this cause of action before analysing whether that tort had been committed.

The Jif Lemon principles (Reckitt & Colman Products Ltd v Borden
Inc[1990] 1 WLR 491)
are the starting point for any passing off action. In this case, it meant
showing that

i. MIL’s business of selling
Moroccanoil in the UK enjoyed goodwill, both through the name of the product
and its get-up (that is, the shape, colour, packaging, etc), making it
recognisable by the public as a distinctive product of MIL;ii. There had been
misrepresentation (whether intentional or not) by Aldi as to the source of their
product; andiii. The misrepresentation had caused
damage to MIL’s goodwill.

MIL alleged three types of
misrepresentation. The first was that a substantial proportion of the public
would take Miracle Oil to be Moroccanoil (as in Jif Lemon). The second was that, although the public might distinguish
MIL’s products from those of Aldi, they would nevertheless assume a connection
between the two, such as a common manufacturer (as in United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513 where this was successfully pleaded). Their third argument was that
the public might assume that Miracle Oil had been produced under licence from
the same manufacturer as Moroccanoil.

Judge Hacon observed that there has sometimes been a misunderstanding as to whether ‘confusion’ or
‘deception’ is the test needed to establish passing off. Aldi argued that
confusion wasn’t enough and that deception was required for passing off to
succeed. Judge Hacon noted that the Trade Marks Act 1994, Trade Mark Directive
2008/95, its predecessor Council Directive 89/104 and Regulation 207/2009 on the Community Trade Mark all
require a likelihood of confusion on the part of the public for a trade mark
infringement action to succeed. Usually actions of trade mark infringement and
passing off are argued together and the evidence used to establish the
likelihood of confusion in trademark infringement cases has often also been
used to show misrepresentation in passing off, creating uncertainty in the
terminology used. He emphasised that the concepts of confusion and deception
have different meanings -- but there is an overlap between the two terms. He then
cited Reed Executive plc v Reed Business Information Ltd [2004] RPC 40 in which Jacob LJ explained that there was a distinction in law between an
assumption on behalf of the relevant public and a wondering on their part.
Judge Hacon said that, in this case, what mattered was for misrepresentation to
be proved by showing whether the public would assume one of the three
forms of misrepresentation, namely (i) that Miracle Oil is Moroccanoil, (ii) that
it is made by the same manufacturer or (iii) that it is licensed.

The proportion of the public
making this assumption must be substantial.
Interflora Inc v Marks and
Spencer plc [2012][noted by the IPKat here]established that, even if most people are not deceived,
passing off can still be proved. The proportion need not therefore be more than half
of the public. In this case, counsel for each party agreed that 15-20% of
the public would be enough to make up a substantial amount. However, Judge
Hacon pointed out that it is virtually impossible to assess how many people
constitute the relevant public and therefore how many form part of the agreed percentage.
Instead he suggested a different approach where the evidence relating to the
assumptions should be considered, its cogency, the broad size and nature of the
market and the sales channels. Then it should be determined whether it is
likely that sufficient individuals will make the false assumption, hence
causing damage to the goodwill of MIL.

‘Initial interest confusion’,
which was at issue in Och-Ziff management v OCH Capital [2010] EWHC 2599 (Ch) [and noted by the IPKat here], was also discussed in light of Professor Wadlow’s book The Law of Passing Off:
Unfair Competition by Misrepresentation.
That concept refers to a situation where a purchaser is initially misled but the
misunderstanding is cleared before he makes a purchase: if a defendant successfully induces the public to do business with him by
making a misrepresentation, that is enough to constitute damage, and
it is irrelevant whether the misrepresentation is later rectified. In contrast,
where the confusion is dispelled before it is acted upon (by making a purchase
for instance), then there is no damage and no possible claim of passing off.

The court also said that there
would be damage even if there was no competition between two businesses and no
diversion of sales. The misrepresentation will cause damage to a business in a
passing off case, if the false belief that the two businesses are associated is
damaging to the goodwill or if it erodes the distinctiveness of the claimant’s
name.

Addressing the similarities
between Moroccanoil and Miracle Oil, the court cited Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24 [noted briefly by the IPKat here], where two different situations were distinguished: the first where a defendant
has taken a conscious decision to ‘live dangerously’ (see United Biscuits) and the second where there was an intention to
cause deception and deliberately seek to take benefit of another trader’s
goodwill. In the first situation, the trader has appreciated the risk of
confusion and has done his best to develop his product at a safe distance away.
Whether it is dissimilar enough will depend on the facts of each particular
case and several factors including the subjective intention of the defendant. As
for the second case, it is easily recognisable as passing off.

The decision

The first limb of passing off is
that the claimant enjoys goodwill in its business. This was no problem to
establish, given the press attention Moroccanoil had received since coming on
the market, the celebritiy endorsements it had enjoyed and the amount
of money that had been spent on its marketing in the UK. Judge Hacon said that
the goodwill was primarily attached to the name of the product, but acknowledged
that the get-up of the product added some additional value to it.

Misrepresentation is the second
element of the classic trinity. The main evidence that was produced by MIL to
show misrepresentation consisted of extracts from beauty blog reviews of the two
products. After analysing them, Judge Hacon concluded that these only showed
that the public who became aware of Miracle Oil did not believe that it was the
same as Moroccanoil or that it came from the same manufacturer. He said that at
most, the blog extracts showed that the public thought that Aldi’s product was
cheeky or that it infringed the copyright or design of Moroccanoil, but they
were not confused about it being the same product or coming from the same
manufacturer.

It appeared that Aldi had made a conscious
decision to package Miracle Oil so that it was reminiscent of Moroccanoil to
some real extent, in particular with the colour theme. Judge Hacon believed
that Aldi succeeded in creating a product that brought MIL’s product to mind, but
that this was not unlawful. Aldi’s product being cheeky or potentially
infringing copyrights and design rights did not make it passing off: ‘living dangerously’ was not therefore relevant here. As for the two other
forms of misrepresentation, no evidence had been submitted from which it could
be inferred that there was a public belief of a common manufacturer or that
Miracle Oil was produced under licence.

Further points were taken into
account such as the fact that Moroccanoil is a high-end salon product, not
one that the public would expect to find in Aldi. Miracle Oil costs about £4
but a bottle of Moroccanoil is worth about £30 and customers would therefore not
view the product as being the same thing. Judge Hacon also pointed out that
there were many differences between the get-ups of the two products, such as
the striking M logo on the MIL product.

... and a young court will not learn how to protect prestige brands against lookalikes

The court thus concluded that
the evidence submitted did not show that members of the public were likely to
assume that Miracle Oil and Moroccanoil were the same product, that it had the same
manufacturer or that the two products were linked by a licence agreement. Judge Hacon said that even
if there were any such members of the public, they would be too few in number
to cause damage to MIL’s goodwill. Although Aldi tried to make the public think
of Moroccanoil when they saw Miracle Oil with packaging and successfully did
so, it was unlikely that purchases of Miracle Oil would have been made with a
false assumption in mind. Initial interest confusion was not
applicable here and there was no actionable form of misrepresentation. Since no
misrepresentation could be established, there was also no damage. MIL’s claim
of passing off therefore failed and the action was dismissed.

NoteThere are currently invalidity
proceedings before the Office for Harmonisation in the Internal Market (OHIM)
for a Community trade mark owned by MIL. This case did not therefore deal
with the trade mark infringement allegation as per Art.104 of Regulation 207/2009 (which deals with stays of national proceedings where validity is in issue before OHIM) and focused solely on the passing off action. Being a common law
action, and thus unconstrained by statutory boundaries, passing off is a
flexible action which can encompass various arguments, such as those put
forward in this case. Here, get-up did not play a significant part in
establishing passing off and cases succeeding on this basis are quite rare, Jif Lemon case being one of those
exceptions since its packaging was so distinctive. Had the case been argued on
the basis of design infringement, the decision may have been different, but in
this case, the High Court’s reasoning on the elements of passing off seems
logical and fair".

This Kat notes that this judgment contains a lively debate on the subject of initial interest confusion, in which the shift in position taken by Professor Wadlow between the third and fourth editions of his book, together with the citation of cases on "switch selling", takes a substantial part. Given the facts that (i) initial interest confusion will continue to be extensively and not always accurately cited at trial in both trade mark and passing off actions until clear guidance is issued by an appellate court, and that (ii) various people to whom this Kat has unscientifically shown the respective get-ups, including the highly influential Mrs Kat, thought they were confusingly similar, this feline would not be unduly shocked if an appeal were to be lodged on the application of initial interest confusion either this time round or in the near future.Cat oil here

8 comments:

This seems like a blatant example of the kind of "lookalike packaging" protested against by the British Brands Group and others, and the case reiterates that they won't get the kind of action they want without parliamentary legislation.

Why should Parliament enact any legislation though? Arguably, this type of competition is good for the consumer. By means of subtle (or in some cases not so subtle) packaging, the consumer is led to link the cheaper product to an essentially similar, over expensive original and is invited to stick two fingers up to the marketing hype.

If I were the "Saucy Fish Co.", I would be giving serious consideration as to ways of extracting the company from the cross-undertaking provisions agreed in respect of the PI by consent:www.ipkitten.blogspot.com/2014/05/aldi-attacked-for-fishy-facsimile.html

1. Business Protection from Misleading Marketing Regulations 2008? The products are being presented as being equivalent, thus making the representation POTENTIALLY misleading. I would contemplate a letter to local weights and measures. I am not sure how you compel them to take action. I'd certainly complain to the ASA

2. The "class of products" cases would appear to suggest that Moroccanoil had a further ground - that the goods contained within the "genuine" bottle had particular qualities and the sale of a hair product in such a similar bottle might suggest that the content of the similar bottle had similar qualities.

3. The "common manufacturer" point probably needed more explanation, but I know a lot of people proceed under the misconception that the major brand owners also produce private label for the supermarkets. sometimes it is true (Covent Garden Soup) and other times it may only be a rumour (Kelloggs Cornflakes?). Even if it were common manufacturer, that might not be enough, unless you could show that public thought claimant = manufacturer.. otherwise you are back to the "quality" point (my 2).

Digressing:After reading this interesting judgment last Sunday, I did a little search to see what I could find about Moroccanoil [especially, because 'Moroccan' sounds familiar]. I found three interesting links from the U.S:

(1) An article on Moroccanoil published by Vogue (Dated March 2010)http://www.vogue.com/vogue-daily/article/vd-beauty-the-frenzy-over-moroccanoil/#1

(3) A settlement agreement & dismissal of action between Moroccanoil and Vogue (Dated November 2012) http://law.justia.com/cases/federal/district-courts/california/cacdce/2:2010cv10048/491030/128

First, not certain whether (2) and (3) are related, but - since IP mediation has recently gained a bit of publicity - it would be interesting to know which ADR method was used to arrive at that settlement. Why they settled is anyone's guess!

P.S: Even more evidence on why you shouldn't tread on Moroccanoil's toes is this other trade mark infringement case reported at http://www.iptrademarkattorney.com/2010/08/trademark-attorney-lawsuit-moroccanoil-hair-care-cream-oil-beauty-treatment-conditioner.html

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Gama and Pal: is the wet-wipe packaging confusingly similar?

Yesterday morning the IPKat posted this item on an ongoing passing-off action, Gama Healthcare Ltd v Pal International Ltd. in which Gama objected that Pal's wet-wipe packaging would lead people to think it was theirs.

When that Katpost went live, there were no examples of the parties’ packaging to show readers. The Kats have since received images of both, which they reproduce below, and they ask readers, through the medium of the sidebar poll below, if they think that Pal's packaging might be mistaken for Gama’s one.

Pal's packs are sold under the Medipal brand and Gama's are sold as Clinell products.

Caveat: this poll is conducted purely for the amusement of readers of this weblog. It is not mandated by the trial judge or commissioned by either party; it is not based on any methodology and it is not intended to have any evidential value at all.

Wet-wipe packaging: do you think you could pick up a packet of Medipal, thinking it was Clinell?

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